Author
Topic: Is this business profitable (Read 3608 times)

I have a general question that I am slightly confused about. Lets say the MD decides to outsource his billing to a billing service because they understand the billing process much better than he does and he doesnt want to incurr the expense of a biller and offering her insurance. This is a win win situation for the doctor. However, lets say this MD had 2 billers that he was paying $40,000 a year to and he is now saving $80,000 a year. Now lets also say this MD make $500,000/year. He just saved himself alot of money by eliminating his billing staff... What confuses me.. is how does a medical biling company make any type of profit, whether they bill by percentage, flat fee or per claim.. this billing company has to hire billers at $40,000/year and pay payroll taxes and the profit of the billing company isnt even close to $500,000. so the billing company is incurring expenses that the doctor is eliminating and the doctor is making so much more money.. How is the billing company suppose to make a profit?.. I hope this doesnt sound like a stupid question.

Most billing companies make a small piece of many pies. A little bit from each practice they bill for. Most billing companies start VERY small with very little overhead. Most billing companies are comprised of a woman working out of her home with a small space. Once the clientele grows they expand.

I find that the billing portion of my job (I'm the office manager for my husband's practice) doesn't take a lot of my time each day. But if I handled billing for several doctors it would take up my day.

Most of the billers on this site are working many accounts for a fee that slides with the growth of the account.

You won't ever make $40,000 a year from one client.....unless it was a HUGE client.

But understand from the doctor's perspective, his overhead continues to go up and the insurance reimbursements continue to go down. He's got to shave overhead anywhere he can. If he can't keep a "biller" busy 40 hours per week, then that job should be farmed out to a company whose sole expertise is billing. They will give him the most bang for his buck because they won't spend time figuring it out, they already know how to do it right the first time!

So to ultimately answer your question, Yes, this CAN be a profitable business. But it won't be right from day one. It takes time to build a clientele.

Most billing companies make a small piece of many pies. A little bit from each practice they bill for. Most billing companies start VERY small with very little overhead. Most billing companies are comprised of a woman working out of her home with a small space. Once the clientele grows they expand.

I find that the billing portion of my job (I'm the office manager for my husband's practice) doesn't take a lot of my time each day. But if I handled billing for several doctors it would take up my day.

Most of the billers on this site are working many accounts for a fee that slides with the growth of the account.

You won't ever make $40,000 a year from one client.....unless it was a HUGE client.

But understand from the doctor's perspective, his overhead continues to go up and the insurance reimbursements continue to go down. He's got to shave overhead anywhere he can. If he can't keep a "biller" busy 40 hours per week, then that job should be farmed out to a company whose sole expertise is billing. They will give him the most bang for his buck because they won't spend time figuring it out, they already know how to do it right the first time!

So to ultimately answer your question, Yes, this CAN be a profitable business. But it won't be right from day one. It takes time to build a clientele.

Wow, there's no way I could have said that better.. I would just add from my Own prospective, I never planned to get so big that I had to hire anyone, my edge of course was my background in insurance and what cinched it for most of my clients was the personal touch, so I knew from day one.. I was it, no employees. (Besides no one could ever work for me, I'd make too many enemies) I also find that many who get into this business with the thoughts they will have this huge company with employees..they are usually operating off of a numbers chart.. not too many of them make it. And I will also echo what DMK said.. you won't make 40,000 off one client.. depending on types of providers you may not even see a profit in the first year or two unless you get lucky right off the back with a huge practice.